The latest drop in the price of Bitcoin (BTC) is strong, with the $7,500 plunge since Tuesday sending the market into a tailspin. Is this just a normal case of high volatility, or is Bitcoin price in a more comprehensive reversal phase?
Volatility damages traders.
The life of the average Bitcoin investor is full of uncertainty. The emotional rollercoaster can be detrimental to the psyche of many, as the Bitcoin market tends to go up the stairs, while the Bitcoin bears just jump out the window.
Several factors are responsible for the current decline in Bitcoin prices, such as the continued rise in bond yields. Inflation Concerns and overall investor confidence decreased
However, it could just be the simple fact that Bitcoin has reached oversold levels. And its correction was accelerated by the volatility caused by the long liquidation. And there may be a fair amount of market manipulation.
Many large Bitcoin ETFs and buyers need to purchase their BTC, and if large leveraged traders are able to liquidate. The price can drop to a cheaper level. All of this is good for these big players. They are likely to be the first group to benefit from market manipulation.
Bitcoin’s standard rollback so far
Source: Trading View
The 4-hour chart for $BTC shows that this reversal of the move has been fairly standard so far. The 0.618 Fibonacci level is a very suitable level to retrace down.And although the decline is deeper, the 0.786 Fibonacci level at $93,700 remains a good level for a bounce back.
Key support at $84,000 meets Fibonacci 1.618 and the 100 daily moving average, so this will be the final support before retesting the latest bull market high at $69,000.
All this said A bounce from current levels around $95,000 could be a distinct possibility. Because this is also the midpoint of Bitcoin’s current range.
$93,600 is the base for the next leg higher.
Source: Trading View
Zooming out to the 2-week chart, we can see that there is a very good level of horizontal support at $93,600. If we return to the previous short-term chart, It can be seen that this line is aligned with the 0.786 Fibonacci. Is it possible that the market structure will remain above this support level? And the next stage of the bull market will use this in its platform.
At the bottom of the chart is the very important Stochastic RSI. On a high time frame like 2 weeks, seeing the indicator lines move down is not a good sign. They will have to pull back to keep the bull market going. The midpoint at 50.00 served as support in the 2017 bull market, it will have to perform the same this time around. Otherwise, a deeper correction is likely to materialize.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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